RBI cracks down on three banks over non-compliance of regulatory norms

RBI action over non-compliance: The Reserve Bank of India (RBI) has cracked down on three banks — Ramgarhia Co-operative Bank Ltd, New Delhi, Mehsana Jilla Panchayat Karmachari Co-operative Bank Ltd, Mehsana, Gujarat, and Navsarjan Industrial Co-operative Bank, Bharuch, Gujarat — over breaches of inter-bank exposure limits and KYC norms.

Ramgarhia Co-operative Bank, New Delhi

The Reserve Bank of India (RBI) has extended the period of directions imposed on Ramgarhia Co-operative Bank Ltd, New Delhi. Initially placed under directions until January 8, 2023, the validity was extended to January 8, 2024. In a recent directive, RBI further extended the directions for an additional three months until April 8, 2024. 

The extension emphasises that it doesn't imply the cancellation of the banking license, and the bank will continue to operate with restrictions until its financial position improves.

Mehsana Jilla Panchayat Karmachari Co-operative Bank, Mehsana, Gujarat

The Mehsana Jilla Panchayat Karmachari Co-operative Bank Ltd, Mehsana, Gujarat, faces a monetary penalty of Rs 3 lakh imposed by RBI for non-compliance with directives on 'Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)' and contravention of Banking Regulation Act, 1949. The penalty, based on regulatory compliance deficiencies, is not a judgment on the bank's transactions. 

The statutory inspection highlighted breaches, including the prudential inter-bank counterparty exposure limit and failure to transfer the eligible amount to the Depositor Education and Awareness Fund.

Navsarjan Industrial Co-operative Bank, Ankleshwar, Bharuch, Gujarat

Navsarjan Industrial Co-operative Bank Ltd, Ankleshwar, Gujarat, is subjected to a Rs 7 lakh monetary penalty by RBI for non-compliance with directives on 'Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)', 'Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016', and contravention of Banking Regulation Act, 1949. Similar to the Mehsana Jilla Panchayat case, the penalty is based on regulatory compliance deficiencies and not a judgment on the bank's transactions. 

The statutory inspection revealed various breaches, including inter-bank gross and counterparty exposure limits and the failure to review risk categorisation of accounts as per prescribed periodicity.